UofSC Economists Predict SC Economy To Remain Strong

Dec 11, 2017 08:29AM
● By Emily Stevenson

Despite a tight labor market and a
series of Midlands-area layoffs due to the recent shutdown of
construction at the V.C. Summer nuclear facility in Fairfield County,
South Carolina’s economy remains strong and stable. Palmetto State
residents can expect that stability to continue in 2018, according to
University of South Carolina economists at the Darla Moore School of
Business.

Doug Woodward, director of research, and Joseph Von Nessen, a research economist, presented their 2018 forecast Friday (Dec. 8) to nearly 250 of the state’s business and community leaders at the 37th Annual Economic Outlook Conference (EOC).

They say South Carolina should see
broad-based growth continue across most industries with accompanying
gains in employment and income for South Carolinians.

Von Nessen said the single best indicator of economic performance – job creation – is expected to grow at 2.1 percent in 2018.

“Although our current economic expansion
is now in its ninth year, it’s important to remember that economic
expansions don’t die of old age,” Von Nessen said. “Market fundamentals
are strong and the state’s economy is in a very good position as we head
toward 2018.”

“The labor market in South Carolina is
more favorable to workers than at any time in the last eight years,” he
said. “With the unemployment rate currently at 3.9 percent – the lowest
level since the year 2000 – employers are having to provide stronger
incentives, such as higher wages, to attract and retain the workers they
need.”

Once again, the manufacturing and
professional and business services sectors continued to be major drivers
of South Carolina’s employment growth in 2017.

Construction didn’t fair as well.

“After being the state’s leading
industry in 2016, construction markets have tapered off in the face of
rising lumber prices,” Von Nessen said. “The U.S. Department of Commerce
imposed import tariffs on Canadian lumber beginning in late 2016, which
has contributed to higher input costs for builders and reduced the
overall growth rate for the industry this year.”

Von Nessen also reported that stronger
global demand in 2017 gave rise to increased activity within the
advanced manufacturing sector, which relies heavily on a global customer
base and is export driven. He said that sector has helped increase
export activity through the S.C. Ports Authority.

While almost all counties in South Carolina saw positive economic growth in 2017, not every business type benefited equally.

“Historically, the majority of job gains
during economic expansions have come from small businesses, but this
current expansion is different,” Von Nessen said. “Larger businesses –
those with more than 100 employees – are now generating a much greater
share of total employment.”

The economists said additional access to
financial capital, which may result from the proposed tax plan
currently being debated in the U.S. Congress, could help small
businesses spur additional growth.

Von Nessen said that growth would likely come in the form of productivity gains.

“Because businesses are struggling to
find new workers in an economy with such low unemployment, access to new
financial resources would be more likely to go towards efforts to help
retain and invest in existing employees,” he said.

Additionally, firms likely would engage
in more capital investment and research and development, all of which
could help to generate productivity gains.

Von Nessen expects the size of the labor
force to continue to grow in 2018 as job opportunities continue to
increase, which implies that a minor decrease in the unemployment rate
should be expected over the next year.

Specifically, the Moore School forecast
indicates that the unemployment rate over the next 12 months will drop
slightly to about 3.6 percent from its current rate of 3.9 percent.
Total personal income is expected to grow at 4.3 percent in 2018, which
would be an increase from its growth rate of 3.8 percent in 2017.

Despite a positive outlook for 2018, Von Nessen said addressing workforce challenges in South Carolina will be vital.

“Labor availability will be the bottleneck of economic growth in 2018,” Von Nessen said.

With labor availability’s critical
importance, this year’s conference focused on addressing the ongoing
workforce challenges in the Palmetto State from three perspectives.

Gov. Henry McMaster addressed
state-level workforce plans being developed. Cheryl Stanton, executive
director of the S.C. Department of Employment and Workforce, focused on
how the department supports workforce training and connects individuals
to businesses and job opportunities. Joan Robinson-Berry, vice president
and general manager of Boeing South Carolina, presented Boeing as a
case study of how one major South Carolina employer has addressed
workforce challenges in 2017.

Retail trade employment in South
Carolina varied among the state’s regions. Overall, employment in this
sector grew 1.1 percent as of October 2017 (compared with October 2016).
Additionally, several regions of the state witnessed more sizable
gains. Regions of the Palmetto State with gains in retail trade that
exceeded the state average occurred in Myrtle Beach (+4.7 percent),
Charleston (+2.2 percent) and Greenville (+1.8 percent). Retail trade
employment declined in Columbia (-0.2 percent) and Spartanburg (-1.2
percent).

Single-family residential building
permit activity was up across most of the state over the last year.
Comparing single-family residential building permits issued year-to-date
October 2017 with those issued year-to-date October 2016, major gains
were seen in Florence (+24.4 percent) Myrtle Beach (+22.5 percent) and
Spartanburg (+20.2 percent). More modest gains were observed in
Greenville (+7.2 percent), Columbia (+6.2 percent), Augusta (+6.0
percent) and Charleston (+2.8 percent). Small losses occurred in Sumter
(-3.2 percent).